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Looking ahead: Key targets for recruitment businesses to get their house in order

It’s a brand new year and the gym is already jam-packed with well-intentioned people determined to get themselves into their best-ever shape this year. It is also a time when management look to the future and contemplate how to build their business over the forthcoming year and beyond. Whether you want to improve employee retention, prepare your business for a potential future sale or simply streamline your client administration, this article looks at some potential targets for recruitment businesses.

  1. Build your foundations: A key part of developing a successful and sustainable business is ensuring you have effective employment contracts in place with your key staff. This is usually also a key concern for any potential purchaser of your business. If you do not have a comprehensive employment contract in place, or you have not had your employment contract reviewed for a while, you may be missing an opportunity to better protect your business. For example, it is now common to see clauses in an employment contract for recruiters, providing that they will not take steps during their employment to compete with their employer and that they will also report their own wrongdoing and that of any third party to their employer. These kinds of clauses can help protect an employer against the risk of a team move to a competitor, as they can require the employee to report a potential team move to the current employer. Similarly, it is now common to see restrictive covenants in employment contracts for recruiters. We specialise in and can prepare a comprehensive and effective employment contract which is tailored for your business for a fixed fee, which will seek to ensure your most valuable assets are sufficiently tied in to the business.
  2. Get your infrastructure in place:Another key aspect of any recruitment business is the terms of business between the recruitment business and its clients (and candidates, if applicable). Again, if you have not had your contracts reviewed in recent years, they may be out of date, in terms of law and best practice. Frequently, I see contracts in place that do not actually reflect what the recruitment business does or how candidates are actually engaged. Often this can occur where a recruitment business has ‘borrowed’ sample contracts from a competitor. I also still see contracts which refer to rolled-up holiday pay, which employers need to move away from. When drafting commercial contracts with clients for recruiters, it is often simpler to have a standard, non-negotiable set of terms and conditions of business and to accompany it with a specific job or assignment schedule which varies according to the vacancy (such as fees and contact details). In my experience, clients find this much easier to complete, so it helps streamline the process and leaves less room for negotiation. Again, we specialise in this and can prepare such contracts for fixed fees.
  3. Keep a roof on it: LinkedIn has revolutionised the recruitment market with its ability to give recruiters, seemingly, unlimited access to candidates and clients. However, many recruitment businesses have no control over relationships that recruiters are able to form via LinkedIn despite recruiters forming these relationships at their employer’s cost and in their working time. Many recruiters have access to LinkedIn Premium and are able to build a portable database of contacts which can easily be transported to a new employer if the recruiter wishes to move to a competitor. Recruitment businesses can seek to include provisions regulating the use of LinkedIn. This can be done by necessitating the need for a recruiter to open a new LinkedIn account when they join the business. This account will then be owned by the company and must be transferred to them on the termination of the recruiter’s employment.
  4. Keep up the maintenance: It is important to know whether there are any potential tax or employment law issues facing the recruitment company, in terms of the way in which it operates and is structured. Employment businesses need to be aware of the basic tax regime impacting on recruitment businesses and whether the way that business is structured, in its contractual arrangements with clients and candidates and the way it operates in practice, reflects that structure. Tax advice should be a key consideration when looking at how the business is structured and ideally will be considered at the same time as implementing any new contracts with clients and candidates. This is a key issue that purchasers look out for when considering whether to buy a recruitment business.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.

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